While investing for tax saving, many people fail to keep in mind that choose a scheme where tax is saved and returns are also high.
Tax Saver Mutual Funds: There are many schemes in the market, in which you are getting the benefit of income tax exemption on investing. If there are small savings schemes, then Equity Linked Savings Scheme (ELSS) of mutual funds is also an option. Taxpayers take their own tax saving measures, under the provisions under section 80C of Income Tax. But there are many people who miss out on paying attention that choose such a scheme, where there is tax saving, but the return is also high. If you are looking for such an option then ELSS is a good option for you. There is usually a possibility that fixed income options will be more profitable. These schemes offer market-linked returns, but investing through mutual funds instead of direct equities lowers the risk.
High Return Funds in 3 Years and 5 Years
Quant Tax Plan: 35%, 24%
BOI AXA Tax Advantage: 26%, 19.5%
Mirae Asset Tax Saver: 22%, 19%
Canara Robeco Eqt Tax Saver: 21%, 18%
IDFC Tax Advantage: 21%, 18%
PGIM Ind ELSS Tax Saver: 20%, 16%
JM Tax Gain Dir: 19%, 16%
Invesco Ind Tax Plan: 17, 16%
Axis Long Term Equity: 17%, 16%
DSP Tax Saver: 19%, 16%
Kotak Tax Saver: 19%, 15%
(source: money control)
Lock in period is also 3 years
The best thing about ELSS is that in most of the schemes here, the lock-in period is only 3 years. Whereas in schemes like Tax Saver FD or National Savings Certificate, the lock-in period is 5 years. AK Nigam, Director, BPN Fincap, says that there is a lock-in period of 3 years and higher returns have made it a popular tax saving option. On a 5-year FD or other savings scheme, where the annual interest is around 6 to 7.5 percent. On the other hand, if we look at the returns of ELSS, investors have got 15 to 20 percent returns in many schemes in 5 years.
The longer the investment, the higher the profit
The corporation says that there is usually a lock-in period in these schemes, but it is not necessary that after that you can redeem the unit. The longer you invest in these schemes, the more is the benefit. For ten reasons, now it has become an important part of not only saving tax, but also of future Nivea or financial planning.
Other benefits of investing in ELSS
Investors of ELSS can also opt for Systematic Investment Plan (SIP). At least 80 per cent of ELSS exposure is in equities. Because of this, the scope for higher returns increases. It also has the flexibility to invest in all market caps, which makes it a unique product among equity funds. The profit on investment in ELSS and the amount received from redemption is completely tax free. Long Term Capital Gains (LTCG) on returns up to Rs 1 lakh in 1 year through ELSS are exempted from income tax. However, profit above this limit is taxed at the rate of 10 percent.
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